*use the following scenario*: as a market analyst for a cereal company, you have

Question

*use the following scenario*: as a market analyst for a cereal company, you have been instructed to develop a regression equation that idetifies the relatonship between cereal sales and sugar content, with the goal of eventually increasing cereal sales. This must be done with minimal expenditure, this you cannot undertake any sample surveys or other extensive data gatehring techniques. The only avaiable data that you have is sugar content (measured in grams per serving) of the 32 different brands of cereal currently sold by the company and the sales figure (measured in thousands of boxes sold) for each brand over the past year. The sugar content for the 32 cereals ranges from 1.2 grams per serving to 4.5 grams per serving. Using this data, you generate the following regression model and statistics.

Sales'= -98.58 + 1459.2SugarContent

r^2= 0.574; t = 3.65 (For SugarContent)

How would you interpret the value of the slope coefficient and what factors lead you to this decision?

Explanation / Answer

Given n=32, therefore, df=n-2=32-2=30. By using excel function =TDIST(3.65,30,2), the p-value = 0.000989. Since p-value is very small, correlation is significant and we can use regression equation to predict sales by using sugar content as explanatory variable.

Slope coefficient 1459.2 indicates that pergram increase in sugar content increases sales by 1459.2.

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